A Novel Profit Maximizing Metric for Measuring Classification Performance of Customer Churn Prediction Models

Provided by: Institute of Electrical & Electronic Engineers
Topic: Data Management
Format: PDF
The interest for data mining techniques has increased tremendously during the past decades, and numerous classification techniques have been applied in a wide range of business applications. Hence, the need for adequate performance measures has become more important than ever. In this paper, a cost-benefit analysis framework is formalized in order to define performance measures which are aligned with the main objectives of the end users, i.e., profit maximization. A new performance measure is defined, the expected maximum profit criterion. This general framework is then applied to the customer churn problem with its particular cost-benefit structure.

Find By Topic